In the fall of 2011, Ron Johnson was appointed not just as CEO of JC Penney, but as the savior responsible for breathing new life into one of the dowdiest dinosaurs in American retail. Seventeen months—and many, many mistakes—later, he’s out of a job. What happened?

Let’s just point this out upfront: By most accounts, Johnson was trying to accomplish the seemingly impossible with a radical reinvention of the JC Penney brand. Many thought that if anyone could do it, it was Johnson, the retail superstar credited for making Target hip and turning the Apple Store into a monster success story. His plans were bold—too bold, virtually everyone now agrees. Correspondingly, he was removed as CEO not because he came up a little short of the goals set for the company. He was ousted because he failed in spectacular fashion.

The superlatives used to describe Johnson’s failures surfaced long before he lost his job. Customer Growth Partners analyst Craig Johnson (no relation to Ron, we hope) told MarketWatch in February that Ron Johnson seemed bound for the “consumer hall of shame.” Last month, one retail expert weighed in with this brutal assessment of Johnson in the New Yorker:

“There is nothing good to say about what he’s done,” Mark Cohen, a former C.E.O. of Sears Canada, who is now a professor at Columbia, said. “Penney had been run into a ditch when he took it over. But, rather than getting it back on the road, he’s essentially set it on fire.”

Bill Ackman, the hedge-fund tycoon who recruited Johnson to take over at JC Penney in 2011, and who has defended Johnson several times in the months since, recently turned on him, using the phrase “something close to a disaster” to describe Johnson’s impact on the company.

So what did Johnson do that was so bad?

He Misread What Shoppers Want
In early 2012, Johnson announced a major overhaul of the way JC Penney does business, with a new “fair and square” everyday low pricing scheme to replace the “fake prices” used commonly in the past. The idea sounded great—in theory. Didn’t everyone hate those “fake prices,” which were inflated only so that the inevitable discounts would seem tempting?

Well, no. Johnson thought it made sense to cut to the chase by listing realistic prices from the get-go and foregoing nonstop sales. It does make logical sense, after all. But shoppers aren’t purely logical creatures. They’re often drawn to stores not by the promise of fair pricing, but by the lure of hunting for deals via coupons and price markdowns. It’s all a game, and a contrived one at that. But it’s a game that shoppers are accustomed to playing, and that many — consciously or not — like playing, with the “How Much You Saved” line at the bottom of the receipt serving as a score.

It didn’t take long for people to note that Johnson’s no-coupons, no-sales experiment was failing to attract shoppers. Sales collapsed through early 2012, and by the summer, even Johnson acknowledged the stores had made a big mistake.

“I thought people were just tired of coupons and all this stuff,” Johnson told Businessweek. “The reality is all of the couponing we did, there were a certain part of the customers that loved that. They gravitated to stores that competed that way. So our core customer, I think, was much more dependent and enjoyed coupons more than I understood.”

He Didn’t Test Ideas in Advance
And why didn’t Johnson understand what JC Penney’s core customers enjoyed? Well, one reason is that he didn’t really ask them. When Johnson floated plans for the chain’s radical makeover, he was asked about the possibility of trying the new pricing strategies on a limited test basis. Johnson reportedly shot down the idea, responding, “We didn’t test at Apple.”

The fact that JC Penney’s longest-standing customers loved coupons and the prospect of finding “steals” via rounds of markdowns should have never come as a surprise to the company’s CEO. Ideally, the retail chain would have also known in advance that customers found Johnson’s new three-tiered “simple pricing” scheme—which didn’t include common shopping terms like “Clearance” and “Sale”—to be enormously confusing.

He Alienated Core Customers
As Johnson removed their beloved coupons and sales and increasingly focused on making JC Penney a hip “destination” shopping experience complete with boutique stores within the larger store, many of the chain’s oldest and most loyal customers understandably felt like they were no longer JC Penney’s target market. The return of “sales” hasn’t proved to bring about a return of these shoppers.

“There’s no reason to try and alienate customers who want to try and shop at J.C. Penney,” Myron “Mike” Ullman told the Wall Street Journal after news broke that Johnson was out as CEO. Ullman is taking over as CEO, a post he held before Johnson was brought in to save the company. Yes, JC Penney has reinserted the executive who was in charge at the time the chain was struggling mightily, and seen to be in need of a radical overhaul. Ullman doesn’t envision a complete return to pre-Johnson policies, however. “I wouldn’t recommend that we go back to the way J.C. Penney was when I left. Things change.”

He Totally Misread the JC Penney Brand
Johnson pictured coffee bars and rows of boutiques inside JC Penney stores. He wanted a bazaar-like feel to the shopping experience, and for JC Penney to be “America’s favorite place to shop.” He thought that people would show up in stores because they were fun places to hang out, and that they would buy things listed at full-but-fair price.

But early and often during the Johnson era, critics pointed out that JC Penney was not the Apple Store. The latter features cutting edge consumer tech that shoppers have grown accustomed to purchasing at full price. JC Penney, on the other hand, is stuck with a “reputation as the place your mom dragged you to buy clothes you hated in 1984,” as a Consumerist post put it. The idea that people would show up at JC Penney just to hang out, and that its old-fashioned shoppers would be comfortable with Johnson’s radical plans like the removal of checkout counters almost seems delusional.

Overall, He Didn’t Seem to Like or Respect JC Penney
In retrospect, Johnson and JC Penney seem like a horrible match. All along, Johnson insisted that he absolutely adored the venerable JC Penney brand. But if he loved it so much, why was he so hell bent on dramatically changing it, rather than tweaking and gently reshaping as needed?

In late February, the Wall Street Journal quoted JC Penney COO Michael Kramer voicing his distaste for the company as it was before Johnson took over. “I hated the J.C. Penney culture. It was pathetic,” Kramer said.

Like Johnson, Kramer is also a veteran of the Apple Store. And while Johnson was never quoted saying anything like that about the company’s culture, his actions demonstrate that he didn’t have much respect for the way things used to be done.

What’s more, Johnson seemed to have a disdain for JC Penney’s traditional customer base. When shoppers weren’t reacting positively to the disappearance of coupons and sales, Johnson didn’t blame the new policies. Instead, he offered the arrogant assessment that customers needed to be “educated” as to how the new pricing strategy worked. He also likened the coupons beloved by so many core shoppers as drugs that customers needed to be weaned off.

Essentially, Johnson wanted JC Penney and its shoppers to be something that they’re not. He wanted them to be more like the scene at Apple Stores, or even Target, when in reality, there was probably more overlap with Macy’s, or even Walmart. The overall impression is that Johnson would probably never shop in JC Penney, and that he certainly didn’t understand or have much respect for the store’s shoppers. If that’s the case, no wonder Johnson’s stint as CEO was such a disaster.

I'm not much of a fan of JCPenny either. They have some decent stuff but everything fits awfully. I means how overweight exactly are their base customers? Would it kill them to being in some skinny or slimmer fitting dress pants and dress shirts?

The problem is that they lost the ides of using the sale methodology as a loss leader or to recapture value from end of season markdowns. As a consumer, more than once, I would see the same item at another store as much as 30% lower in price. The brands sold were not unique to JC Penney. The "sale" mentality drives foot traffic and the retailer has the opportunity to showcase non-sale items or accessories. The layout of Penny's was OK, but should have been redesigned to lead the customer visually but that is another story.

Boscov's hit a home run with their "Auditorium" that features deep discounts on excess merchandise attracting foot traffic and having the customer walk through the store to reach the discounted area with key product placements along the way capitalizing and maximizing exposure.

Lord and Taylor increased traffic with Friends and Family discount cards featuring 25% off and I can name a few more success stories along the way.

The article missed the brands the core customer wanted were missing. Penney's was never the flashy place. But the store brands were good value. I still have jackets bought years ago. Shirts that are still classic. Penney's was a soft line retailer first. No fanboys here. I lived in one of the largest retail areas in the US where sale was the only way to get customers in the store. You do not change that over nite. Nor does the customer want to be Walmart. Plus the consumer has changed. This is not the time for frills. The economy is down wages are flat the poor are demonized online shopping is more convenient. Shopping is not the sport it once was. There are more demands on the paycheck,the smart phone,the cable,etc. People wanted the comfort of known qualities.

Article misses the negative impact having Ellen be the face of the company and featuring gay couples in their ads as well. The media focused on these aspects heavily, giving many the idea that the gay market is what they were targeting now. Core customers did not feel any of the changes were for their benefit.

There are definitely some things to be learned here. First, the culture at Apple is one of incredible arrogance and so people should think twice (or three or four times) about hiring an Apple exec to run their business. Second, it's astounding how many companies in this country can't figure out the basics of business, with one of the most important tenants being "listen to the customer." Instead, what happens is a company will tout its incredibly talented management team and justify the big salaries (while paying the employees in coal), but then that mgt. team will turn around and make the stupidest and most basic of mistakes. I just can't fathom how these companies and the boards that should be overseeing them can continually make asinine decisions that first year business majors wouldn't make. I'm working with a company now that is replacing the custom software that successfully runs its company with a product that does half as much at 4 to 8 times the price. The main contact from the company selling the new software recently asked the IT mgr why they bought the software, admitting it only did half as much as the old software! He didn't see the logic and neither do I. Unfortunately, there are too many clueless CEOs in America today. (All that having been said, I think there are also a lot of clueless customers that fall for the fake prices and think they've saved money.)

He Alienated Core Customers -- As Johnson removed their beloved coupons and sales and increasingly focused on making JC Penney a hip “destination” shopping experience complete with boutique stores within the larger store, many of the chain’s oldest and most loyal customers understandably felt like they were no longer JC Penney’s target market. The return of “sales” hasn’t proved to bring about a return of these shoppers.

Why would we go back when you (JCP) no longer have the merchandise we are shopping for? Sure, we love sales but if we have nothing to buy...

Unbelievable
- cnn's tv coverage regarding JC Penny’s
ad campaign. CNN is constantly pushing and promoting the Gay agenda. They gave every reason in the book for JCP
failure and loss except the REAL reason customers left in droves - the new CEO
pushed the gay agenda. It is time for
the media to wake up - they are deceived thinking that America wants this!

I used to do
all my shopping at JC Penny but since it started pushing the gay agenda. I
refused to give them $1. dollar.

If those
choosing to live the gay lifestyle want to, that is their choice - extremely
bad decision! But don't expect me or
most in America to embrace it and celebrate this perversion.

The LGBT act
like big bullies, because they are desperate for everyone to accept their sin.
And if we don't embrace their lifestyle, they try to force us to, using their
money and lawyers to sue and push their ungodly agenda on our children, our
schools, our organizations, and our country. Nothing but big bullies! Really Tired of it!!!

It’s time for
America to start pushing back, our corporations and organizations, churches,
sports associations, etc. need to stand
up and let them know we will not tolerate this.

I will pray
for them, I will tolerate them and be kind, but I refuse to sit back and do
nothing while they try to force their ungodly agenda my children, my family,
and my country!!!

I personally
think some of Ron Johnson’s ideas could have worked, but he completely failed us
when he used his highly paid position as CEO to force the Gay agenda on JCP
customers and families, almost completely destroying the company – JCP should
ask for a refund.

Much is made of how Johnson supposedly misunderstood JCP's "core customers", and yet it's clear that those same core customers were a dwindling group of cheapskates who weren't producing enough sales to support the company, and were the reason JCP was in the crapper in the first place.

It's so easy to join the chorus of "rear view mirror experts" that knew all along that Ron Johnson's hubris and ego would lead to the reckless destruction of American Icon Brand....brilliant commentary! The real travesty is a Board that sat in the back of the bus....approved a highly ambitious transformation plan for an increasingly irrelevant retailer....and didn't have the stomach for the inevitable "rocky road" they were travelling. I feel sorry for Johnson. He partnered with a group of cowardly stewards (and invested 50M of his own money) only to discover that when the seas got choppy they would be the first to clamour for the life boats. That's hard to live with.

"Circumstance creates a hero and not a hero creates the circumstance."

Ron is good at Apple mainly because in Apple, the strong infrastructures are already well built, the talents are there, the products are there, so Ron is able to made it with his own talent. However in JC Penney, the structure there is not strong at all, there is no differential products, there is no special talents to supplement Ron, so he fails badly.

Articles like this are full of worthless hindsight-based assessment. What do you do with a sinking ship? I think some of these 'failures' are valid, but the truth is that if the writer of this article was given the same task, it's hard to say whether they would do any better. Or any of us. JCP has baggage, countering that is very difficult.

I think the misleading takeaway is "don't change anything unless you are magical," which doesn't really help anyone.

I love the Apple Store and do go there to hang out with my son and look at the new stuff while my wife shops in the mall. I have not set foot in JC Penny in years...like 15 or 20 years. I have no idea what the "new" JC Penny looks like but if Johnson thought people would hang out there like an Apple store he is delusional.

if that's what he did, that's inexcusable, and he deserves to be fired. But the cheapest brands were NOT carried there, there was great stuff, including the Sephora shop in the middle of the store. So I certainly hope they don't throw the baby out with the bathwater. They should keep the good--and there was lots of good-and get a better person to implement the good stuff and keep it going. How about someone who actually likes and respects people--of all colors and orientations. A woman, maybe?

Not a word here about how he mistreated the employees. He fired how many, around 46,000? The ones that were left were overworked and told that their job was always on the line. Just try to get some help in any JC Penney store.

Not a word here about how henever moved to the Dallas area to work at headquarters. He commuted by private jet from California and stayed at the Ritz Carlton hotel in Dallas. I don't think that did much for morale at JC Penney headquarters. I would think that 50 million dollars should be plenty to move his wife and kids to Dallas. The fact that he didn't move shows how out of touch with the employees he was.

Not a word how he ruined the clothing lines offered at JC Penney by buying only the cheapest quality thinking that customers wouldn't notice.

I don't follow comments on-line very often but whenever I do I am always struck by the crude comments. Guess I'm in the minority, but I absolutely love what he has done to JC Penny, and my experience goes back tow generations to when my mother shopped there for material to make aprons. My store here in Madison, WI had been transformed into a beautiful place to shop, with unbelievable prices for great stuff. Judging from the tenor of the article, I guess I'm one of the few women who does not clip coupons.Hate 'em. I think it wasn't just public opinion that sunk the store--we'll all seen it TV series that don't catch on right away but end up with a widely loyal audience. all the entrenched, nonforward-looking resent of Ron within the company certainly didn't help. Ron Johnson, you spoke to me. Sorry to see you go and sorry to see Penny's go back to the same old stuff.

Everyone wants to fixate on the cultural aspects, the rebranding, etc. But when you have a website that is beautiful, but a trainwreck in terms of actual functionality, a store isn't going to prosper. When you advertise specials that can't be found (or are permanently sold out) in the store and online, the store will sink like a brick. There was nothing particularly wrong with the concepts--but even the shiniest brightest concept can't make up for a total failure to execute.

I think there is a lot of truth to your final comment, that he didn't like or respect the brand. Different strokes for different folks. I like JC Penney and shop there a few times a year. I have only ever been in the Apple Store once, to buy my wife an iPhone on Valentines Day and I will never return. Ever. The energy in the store was off putting and it was impossible to get any help. If that's what his vision for JC Penney was, then I can see why he failed.

@BeverlyAngermeier uh - so you know, Ms. Degeneress was only a small piece of the initial ad campagin. and I do not recall her promoting any nastiness on any of those commercials. Admitedly, some were poorly written, but pushing nasty? Nah... Unless you consider every day low pricing and changing the way a hundred plus year old organization conducted their business as nasty. Come to think of it, I'm betting the stock holders do think she was promoting nastiness, but not exacttly the brand you were so sickeningly implying.

I'm not sure I agree with this statement. JCP still have a lot of good items that were always there before. Statford shirts for men, Worthington and Liz Claiborne clothes for woman. Levis for everyone. The only line which they discontinued and recently brought back was the St. John's Bay line. That was a mistake. They still have plenty of top quality items that they have always carried and are 10-20% less expensive then Macy's. If I need a top notch business suit or a nice dress for an occasion I still go to Penneys!

@Just-the-truth WOW! I've never seen someone give themselves a moniker of something so opposite of who they are. Truth implies reason. You are a bigoted sicko. Your mind is too small to reason through anything much less ideas such as equality and justice written out in the Constitution of the United States. I'm not gay, I'm just rational. Try Just-the-Minimum-Brain-Cells-to-Breathe as a moniker. Be free! Be YOU!

@Just-the-truth I am confused. Do gays like everyday low pricing? I hadn't heard that before. Thanks for the heads up.

I rather think the article summed up the poor performance in terms of the fact that this guy had an ego the size of Montana and didn't listen to the customer... didn't weigh the magnitude of the history and girth of an established corporation and it's clients.

Much the same way as some folks tend to not listen to the teachings of Jesus Christ who taught to love one another; love everyone. Not too sure he was speaking in terms of an exclusive club.

Finally, pushing lifestyle? I couldn't sleep with anyone I didn't have chemestry with - no matter WHO pushed any agenda.

@Just-the-truth Like we cared about the "gay" agenda. I shopped for the store brands and bought on sale as I knew the game. In many areas there were the sales game. Customers would look and see if they could actually get a steal.on a deal. It was fun. When those brands were no longer there why would I go to shop when there was nothing.

Other things hurt. From the price of gas to the economy. People who are fearful of losing their income are not about to buy just because. When it is cheaper to buy over the internet (and they have your size) than to run from store to store in hopes of finding that shirt in the color you wanted.

@Just-the-truth You might notice that you're in the minority with those opinions. Most of this country supports gay rights. There was a time people started realizing civil rights are what this country is all about and they got behind that for people of color. Yet there was still a vocal, racist minority who railed against it and tried to turn back the hands of time. They often used the Bible to justify their beliefs, also. Congratulations, you have equated yourself with those people. You're in the bigoted minority that will just end up looking like fools to future generations.

@Just-the-truth The 'Gay Agenda"? What, precisely, is the Gay Agenda? Have they sent out memos?

Was there a 'Women's Agenda' when Susan B Anthony wanted equal treatment for women ( Which neither Old nor New Testament provided, btw)? Was it a Black Agenda when Dr. King wanted equal treatment for blacks?

The fact that people who are not like you wish to be treated with the same respect does not make their actions an Agenda.

@maddog_uk_69 This is precisely the point. The generation that made Penney's famous is - quite literally - dead. The children of that generation are in their 60s and 70s. Johnson made an attempt to place the company into the demographic that is purchasing in today's economy. The only true problem is that he underestimated just how toxic the brand name was to that group. Ironically, the forums regarding Johnson's ouster are filled with the small minority of people - close minded, bigoted and not too bright - who still made Penney's their first choice for shopping. It is fortunate for the world that these dolts are in a minority. However, it is the death knell for Penney's, as they are again adopting the cohort which drove their sales down originally.

@mary.waterton I suppose you oppose equality on religious grounds. In reality, you have been lead astray by "religious" leaders. You believe what other people have told you all your life and those people are wrong. The reality is that gays and lesbians are born that way just as straight people are born straight. God loves us all equally. It's not a sin to be the way God made you. But it is a sin to be judgmental. Doesn't the Bible say "judge not, lest ye be judged"? It is not within your power to understand Gods plan, but it is within your power to leave it to him. If gays are hurting anyone because they are LOVING another person of the same sex, then leave it to God to work out. When you step in and try to play God, you are much more sinful that someone who just wants to be treated fairly and be allowed to love who they love.

Does this mean anything to you? Luke 6:37 "Do not judge, and you will not be judged. Do not condemn, and you will not be condemned. Forgive, and you will be forgiven."

@bt60 @BeverlyAngermeier bT60-- you misunderstand Beverly. She didn't mean that the CONTENT of the ad campaign was nasty. Old Bev finds Ms Degeneres offensive. Bev's a bigot. However, I do find it charming that you didn't even consider that and peg her small mind right away. One day, dinosaurs like Bigoted Bev will die off and we may a period of Enlightenment.

I rather think it was too much - too soon. Yes - that demo is old and dying off - but it is who brought you to the party... take care of your core customer and slowly begin to add new aspects that can grab the younger cash-spending demo...

Everyday low price isn't going to grab anyone though. Department stores thrive on 'specials'. I agree - to make it a fresher nicer environment with some squeaky clean new merchandising attributes - but you gotta have occasional discounts. We've trained the customer that their underwear will eventually go on sale!

Now - to my real thoughts on moving Penny's out of the dark ages.... Dump half those locations in outdated malls swimming in lousy stores and architecture as mildewed as the odor they possess.

Add a new prototype of smaller JCP boutiques with an accent on younger attitudes, in hot zip codes - and see what happens....

I'll take a few million dollars now, JCP corporate heads. Two sentences could have cost way less than the last two years worth of horrendous merchandising and marketing errors.... :)

the venom spewed by the Leviticus 18 crowd always is accompanied by quotation of Luke 6:37. In Ignorance. If one were to reference the first chapter of Romans, he would be labeled a hateful bigoted ignorant homophobe. I understand that Jonson said in an interview which was televised that, well, he really didn't want Christians to shop at Penny's. Can't find it on YouTube or anywhere else. It must have been purged. Maybe the story was apocryphal. But if he said that, he got his wish. By the way, is there any way (gently or harshly) one may voice objections to the GLBTINP community (such a small percentage of the population as to be empirically aberrant) without being flogged and dowsed with vitriol?

You think @beverlyAngermeier is a bigot, because she disproves of homosexuality and any company that uses homosexuals to represent their brand.

You can't tolerate @beverlyAngermeier intolerance of gays, so you call her a bigot. You yourself are bigoted towards those who disapprove of gay lifestyles. Thus lies the hypocrisy.

You may argue that we shouldn't tolerate bigotry on any level, as bigotry is hurtful and all bigotry is bad. However, I think we would agree that as a society we shouldn't tolerate or accept the views of various groups that harm others such as radical extremists, pedophiles or animal abusers. In other words, it is "OK" to disapprove of, or be bigoted towards, these groups as they are clearly ethically wrong.

Now we arrive at the crux of my argument. It is OK to be intolerant towards groups that promote immorality, and it is NOT OK to be intolerant towards groups that are morally indifferent (such as race or gender). I think we might both agree with that statement. The question then becomes, who has the right to decide what is moral and what is immoral?

You, no doubt, follow a different ethical system than @BeverlyAngermeier. You think homosexuality is morally indifferent, and she believes it's morally wrong. According to her ethical system her intolerance of homosexuality is just as acceptable as your intolerance of racism.

You see, Jane, @bt60, here you are insulting Beverly, because her actions violate your moral code, when all Beverly is doing is insulting the people whose actions violate her moral code.

Unless you can prove that your ethical system is right, and hers is wrong, or your moral code is right, and hers is wrong, you are just as guilty and shameful as you accuse Beverly of being.

Oh yeah Jane, I got it - from the start.... I wanted to lure her in to reading the reply and zing her at the end.... Problem is... I don't think bigots "get" their bigotry.

Before they die off - I wish that something - some way - would cause them to look at this jaded, one-sided, disgustingly narrow-minded view - from even a slightly different angle. One that implies... that there just may be another side to the coin.

It doesn't seem Bev is open to that, however. Maybe if one of her children were gay... but then again, I don't think I'd wish that on the child.

All children of God should be raised in a loving nurturing home where they ALL are loved and respected and appreciated for the gifts they are to the universe. Not ridiculed and hated due to misguided 'faith' in words that just happened to be translated by haters. And no, Bev - that is not a cop-out rationalization. Research it.

The board at Penny's may have been misled by a President that wasn't on the right track - but you Bev, don't need to manage your life with the same ineptness and blind faith in the wrong information.

@martinbNo one cared about that foolishness. It was the lack of soft goods sales experience and customer knowledge. Penny's customer are not the "hiP' to the trip buyer but one who wants ok fashion at good prices.

The stores looked like Apple stores and the lack of merchandise turned of the bargain shoppers. He also fell into the "urgency" theme(having low inventory so the customer won't wait for a sale)

Also the customer base is ageing. What Penny's had was cross generation customers, low middle class people who wanted well made serviceable clothes and housewares.